Monday, February 15, 2010

The Economics of Parking in the Snow

I have been thinking about how several feet of snow changes the balance of economic forces governing parking in city neighborhoods. Any city resident has seen the phenomenon of reserving parking spaces with trash cans and lawn chairs over the last ten days.Normally, the price of parking in a residential neighborhood is stable. Most Wilmington residents can park in their neighborhoods for free, though some streets require a residential sticker, which is meant to keep commuters from parking on city streets to the detriment of residents. I live in a mixed use neighborhood, which means that streets provide parking for residents at night, and workers and customers during the day.Instead of adjusting to balance supply and demand, markets can become less efficient when faced with the stress of sudden scarcity.For instance, the practice of reserving parking spaces with lawn chairs illustrates the concept of hoarding. When goods or services become sharply scarcer, consumers tend to hoard them, further reducing the supply. A hoarded parking spot is not available for other drivers, especially in a mixed use neighborhood like mine, which is why I didn’t try to save my space while I was at work today.In this case, I was lucky; there were several spots available when I got home this evening. And yet, on other snow days, I have been forced to park a block or so away, which points out another feature of scarcity, that of volatility. In volatile markets, supply and demand fluctuate wildly, making availability and price hard to predict.While the scarcity of parking in my neighborhood will dissipate with the melting snow, the scarcity of fossil fuels is inexorable. The balance of supply and demand for parking will be restored in the spring. But the supply and demand of fossil fuels will continue to gyrate from season to season.